France

A society that is given the option to protect itself is not a fearful society, it is a prudent one. The victims of Paris were never allowed the option to protect their lives, nor were they fortunate to have armed defenders present or trained combatants to stop the attack before it reached them. People need the opportunity to secure their own safety since, as the past twelve years has shown, the State will fail them.

On Monday, Mauricio Macri, the son of Italian-born construction tycoon Francesco Macri, beat out Cristina Kirchner’s handpicked successor Daniel Scioli for Argentina’s presidency in what amounted to a referendum on 12 years of Peronist rule. Now, Macri faces a trio of daunting tasks: i) restore central bank liquidity, ii) implement a new FX regime, and iii) tackle the ballooning budget deficit. The most most pressing concern: the central bank is literally out of dollars. 

The world is changing in so many ways which is ignored by markets and commentators. The Paris event is yet another wake up call for the markets on geopolitical risk, for the under-investment in education and basic research, but most importantly for how we continue to ignore facts. First it will get worse... we are simply not prepared for geopolitical risk to matter for markets neither are we yet willing.

Following yesterday's dramatic geopolitical shock, U.S. equity index futures rise as Russia has not escalated the confrontation with Turkey as some had feared, while Asian shares fall, reversing earlier gains. European stocks are rallying and the euro is falling on the back of a Reuters report that the ECB is mulling new measures to prop up lending, although it’s not clear at this point what the real impact from these measures would be.

Despite demands from France's Hollande, America's Obama, and NATO's Stoltenberg that this situation not esclate, it appears Putin is not taking the shooting down of a fighter jet lying down. The seemingly cagey confirmation by NATO and Obama of Turkey's claims that Russia invaded its airspace has been rebuked by Russia which claims the Hmeimim airbase radar shows the attacking Turkish plane violating Syrian airspace. In response, Russia is moving a Cruiser 'Moskva' off the coast to strengthen air-defenses - just as French and US carriers are on their way.

"Why are Western leaders expressing their determination to “destroy” ISIS using all means necessary, while avoiding the most significant factor of all: the material infrastructure of ISIS’ emergence in the context of ongoing Gulf and Turkish state support for Islamist militancy in the region."

It had been a relatively quiet session overnight when as reported previously, the geopolitical situation in the middle east changed dramatically in a moment, when NATO-member country Turkey downed a Russian fighter jet allegedly over Turkish territory even though the plane crashed in Syria, and whose pilots may have been captured by local rebel forces. The news promptly slammed Turkish assets and FX, sending the Lira tumbling, pushing lower European stocks and US equity futures while sending 2 Year German Bunds to record negative yields.

It may be a holiday shortened week in the US with Thanksgiving and Black Friday sales on deck (some of which may be starting as soon as Wednesday) but there is a lot of macro data to digest in the next few days.

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

With the ECB expected to announce a boost to QE and pushing rates even lower into record negative territory, perhaps Markit did not get the memo to double seasonally adjust the seasonally adjusted European manufacturing and services PMI survey data, when instead of providing cover for Draghi ("look, the economy is slowing down even more, surely you must unleash more printing") it reported that not only the Manufacturing PMI rose to 52.8 from 52.3, a 19 month high and above the highest estimate (range was 51.5 to 52.6), not only the Service PMI rose to 54.6 from 54.1, a 54 month high and also above the highest estimate (range of 53.5-54.4), but the Composite PMI soared to the highest level recorded since May 2011, rising from 53.9 to 54.4.

Mass surveillance at home and endless military projection abroad are the twin sides of the same coin of national security, which must simply be maximized as much as possible. Conspicuously missing from President Hollande’s decisive declaration of war however, was any mention of the biggest elephant in the room: state-sponsorship. A senior Western official familiar with a large cache of intelligence obtained this summer told the Guardian that “direct dealings between Turkish officials and ranking ISIS members was now ‘undeniable.’”